⚠ Signal Proposal Discussion Thread: Introducing a "Locking for Reputation scheme" for DXD

See proposal here.

Proposal text:

“This is a signal proposal. If it passes, the DXdao agrees to explore implementing a “DXD Locking For Reputation Scheme,” where DXD tokens can be locked for a given period X to generate Y Reputation in the DXdao.”

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Would it be a one time event? Or could people continuously lock their DXD to get reputation?

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I think this is in general an important question: Who and how should the DXdao invite into the organisation. Currently, there is a social rule that you should only get rewarded REP for real work. Should we change that? I believe we should do everything we can to not let the DAO get captured from developers and workers only.

I believe we should start experimenting with inviting different user groups/interests into the organisation with a variety of ways. It should start with small distributions so the DAO can get a feeling for it and learn how to distribute reputation for value/work/liquidity. One example would be to give the investors an ability to earn voting power/reputation over time by locking DXD tokens into a contract.

Positiv:

  • Give investors a voice
  • Strong signal to the public that we are open and inclusive
  • decentralisation of power
  • Reward investors over time with skin in the game
  • Give DXD an additional utility

Negative

  • Could lead to investors taking over control (depends of how the distribution is configured)
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I am un-opinionated. Seems like the better question is: what do we use as a yardstick? What is the appropriately weighted balance of interests? What does the DXdao value?

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I think it’s great to broaden the ways to get REP in DXdao.
I believe that DXD holders can and should contribute to governance decisions (through the possibility to get REP for vesting DXD).
IMO it should first be a capped experiment (in terms of REP allocation)

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I think the different modes of participation should include promotional content, use of DXdao’s applications (how to track that, have not figured out), getting a proposal passed, and developer contribution as ways to earn REP.

Perhaps DXD staking for REP should only be made available to people who have participated in one of these modes, to ensure that the ones who stake have already proven their capability to contribute meaningful ideas/work to the growth of DXdao.

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I generally like the idea to have a diversification of “skills” being attached to DXdao. I am not sure if I like the idea of investors gaining reputation with their DXD locked down in a smart contract, as this could could bring up an imbalance in voting power between people participating in DXdao because of their attitude/work in contributing to the collective and people who are let’s say “incentive” driven. However, if the option will find interest the general setting of that smart contract has to be done extremely well in regards to limit the reputation. Also, I prefer the active “asking” for reputation over having an automated way of “collecting” reputation. Finally, there is always the possibility to make a proposal and ask for reputation (also providing reasons why one should gain reputation) which can be reviewed by the collective with the chance to exclude certain investors by not voting for that proposal. In this case the overall process is being guided by the collective.

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I would love to participate in the voting processes, if I could earn some rep by staking that would be awesome. Still trying to think of a proposal that could potentially pass…

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This is a good point, I don’t believe passivity should be rewarded. Oddly enough, hex coin has a mechanism where if users don’t unstake at a proper time, they lose part of their reward. Ex: Stake for 25 days | At the end of the 25 days, if you do not unstake, your rep is lost.
Also, maybe there can be a two coin system. Rep, used to pass proposals, and veto, used to require a higher majority of rep in order for a proposal to pass. The investors staking can get less rep, but can also get veto. This can be a way for investors to show some concern about the direction users with rep are going. Not sure about implementation, just an idea.
Also, instead of staking, maybe providing meaningful activities within the ecosystem should allow for some rep. Providing liquidity to our exchanges, for example.

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Financial or community bounties are always a great idea

I agree this is a really important question. I’d phrase it like this:

  • Should you be able to earn voting power in the DXdao just by using the DXdao’s products?
    (note this is not the same as asking if users should earn DXD from using a product, since without a locking scheme, DXD does not = voting power, only financial interest)

Reasons for yes

  • Users have information that can help the DAO better accomplish its goals of business success, advancing decentralization, and so on. If users don’t get voting power, this information will be lost, and the DAO will be worse off.
  • If users don’t have voting power, the DXdao will inevitably mistreat users, because they are not represented in the decision-making process. Similar to the first bullet, but worth noting.

Reasons for no

  • Huge majority of users have almost no interest in governance, won’t have strong opinions, and won’t participate even if given voting power. This is a negative for the DAO.
  • Users voices are already represented in the DAO, through their use of products. They influence the DAO by deciding to use the products more or less.

My answer at the moment: no

Right now I lean towards saying no, users should not be given voting power just by using the product. However, I think we should emphasize for users the path to voting power everyone has: contributing to the DAO. We should consider having a great path for new people to come in and attempt to contribute, and then linking that clearly somewhere in most of the DXdao’s product front ends, as well as regularly mentioning it on social media, etc.

Same question for investors

The DXD locking for rep scheme would also give investors a direct path towards having voting power. Right now, I lean towards the same answer: by default, let investors just have financial interest in the DAO. They can exert their influence by investing or divesting if they wish. And they can become “activist investors” if they wish, contributing to the DAO to gain voting power.

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Is reputation revocable?

As an example, a possible schema would be allow DXD to be locked for a full year and during that time the address that locks the DXD has a proportional amount of rep (rate to be determined) that is revoked when the DXD is unlocked.

I think this has enough value to be worth exploring, as it encourages active participation among long term DXD holders. It also prevents the influence of the investor from extending past their ownership of DXD (ie after they sell and are no longer incentivized to behave coherently for governance)

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I think we should emphasize for users the path to voting power everyone has: contributing to the DAO.

Good point. I joined this DAO without contributing code, without investing early, and without staking. Becoming a part of a collective starts with showing up and joining the conversation.

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This is a very interesting mechanic and is definitely do-able (Reputation can be slashed).

Yeah, Synthetix did something similar, you earn NSX tokens by locking up your SNX for 1 year, if you take them out you won’t get those rewards. After that time frame you can keep them there or withdraw.

Hey guys, first post here.
Interesting suggestion!
What if staking DXD for REP would take away your share of the fees? (Maybe redistribute it to other holders, or something else)
So if you want to use your DXD tokens to generate REP, you can but you have to give up the fees, this way passive holders who don’t care about governance wont stake for REP because these people usually just want to collect fees. And DXD holders who do care about governance can make a trade off between fees or REP.
Interested to hear what people think!

I’m now leaning this way as well honestly. Apart from the excellent points you raise, I’m also very concerned about the potential abuse of “Rep farming” by bad actors to execute various selfish voting attacks (something that’s been brought up a few times and we should assume will inevitably be attempted). The introduction of passive methods of gaining Rep just increases the attack surface too much for my comfort, and until there’s been a lot of discussion & exploration with this (and there are possible solutions, Kleros has got a nice system to prevent abuse for example) it should be postponed. While there’s still a few attacks that could potentially work (outright bribing voters is always a tough one), when the voters are all people that have a significant stake in dxDAO success through active contribution, hopefully that’s a minimal risk.

The main counterargument I’ve heard that I found to give me pause, would be that this will end up concentrating disproportionately greater voting power in early contributors, which itself leads to a form of centralisation down the road. While I definitely agree with that as being a risk too, it’s one the community is going to have to face regardless as things develop.

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DXD holders are looking for economic exposure to dxDao. Since REP currently can only be earned through contributing work, many DXD holders want to be more involved to help dxDao succeed. DxDao needs more active community members contributing real value add. Making REP contingent on adding value incentivizes DXD holders to become active members of the community and to contribute work rather than leaning on a crutch of capital.

Let’s not throw away a huge incentive for newcomers to get more involved!

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Hey guys, 2nd post.
I initially liked the idea of staking dxd for REP or having the option of staking for REP or fees. but after reading the other comments, I’m now leaning more towards work/contribution. Not every dxdao user necessarily needs or even wants REP yet it should operate just the same for them. So while I may be shooting myself in the foot, not currently having REP, I believe in this project and expect to hang around and hopefully find ways to contribute and earn some REP. Staking or other means of earning REP can always be discussed again in the future if need be.

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Yeah, absolutely - and there’s probably a lot of ways to handle this too that haven’t been discussed yet. One idea I heard for example was a limited staking period, with any Rep earned by some specific DXD token being stripped when unlocked & the rep per token capped after 1 year. Something like that could be used to provide limited voting rights & hopefully be much less gameable, act as a compromise. So you’re right, this is indeed something that can be revisited down the track when more research has been done & things have matured a bit.

1 Like